Assessing the Seasonality of Tourism

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Visions in Leisure and Business

Volume 6 Number 2 Article 6

1987

Assessing the Seasonality of Tourism

Joseph Andy Soesilo Arizona State University

Robert C. Mings Arizona State University

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Recommended Citation Soesilo, Joseph Andy and Mings, Robert C. (1987) "Assessing the Seasonality of Tourism," Visions in Leisure and Business: Vol. 6 : No. 2 , Article 6. Available at: https://scholarworks.bgsu.edu/visions/vol6/iss2/6

This Article is brought to you for free and open access by the Journals at ScholarWorks@BGSU. It has been accepted for inclusion in Visions in Leisure and Business by an authorized editor of ScholarWorks@BGSU. ASSESSING THE SEASONALITY OF TOURISM*

DR. JOSEPH ANDY SOESILO, ASSISTANT PROFESSOR

DEPARTMENT OF GEOGRAPHY ARIZONA STATE UNIVERSITY TEMPE, ARIZONA 85287

AND

DR. ROBERT C. MINGS, ASSOCIATE PROFESSOR

DEPARTMENT OF GEOGRAPHY ARIZONA STATE UNIVERSITY TEMPE, ARIZONA 85287

ABSTRACT

Seasonal fluctuations are common within the tourist industry. The effects of seasonality upon most tourist communities are considerable. The purpose of this study is to examine the seasonal behavior of tourism as reflected in sales tax collection data for Scottsdale, Arizona. Emphasis is upon how individual types of businesses respond to monthly changes in visitor expenditures. The period of study is 1972 through 1984. The results of the analysis show that businesses are affected quite variably--ranging from strong seasonal responses in some to no apparent response in others.

Tourism is an important economic activity in many American communities. Commonly, tourism is more important during some portions of the year than others. These seasonal variations may be in response to a variety of factors such.as climate, school closings, legal holidays, etc. Although numerous economic activities are seasonal in nature, tourism appears to be affected more than most. Indeed, one of the most complex aspects of assessing tourism impacts relates to the seasonality factor. (6)

INTRODUCTION

The purpose of this paper is to investigate the seasonal impact of tourism. The

During the peak season, the population of winter visitors in the city, on a given day, is estimated to be in excess of 28,000. This figure constituted approximately 25% of the city's estimated 1984 resident population of 110,000. This is a major increase in the actual number of people residing within the city during a portion of the year (Part-time Residents Survey, 1985). The Scottsdale Scene reports that the most important reasons for winter visitors being drawn to Scottsdale are: 1) good weather, 2) the presence of local friends and relatives, 3) positive previous experiences in Scottsdale, and 4) property ownership in the area.(4)

The relationship between the seasonal influx of winter visitors into Scottsdale, and the resulting "squeeze" on local institutions are found among many towns across the Sunbelt of the United States. The seasonal impact of tourism will be reviewed in this paper. The primary objective is to examine tourism's seasonality in Scottsdale through measuring the variable economic impact upon selected types of businesses.

Expenditures of out-of-state vi·sitors are an important contributing force to the economy of Arizona. A study by the College of Public Programs, Arizona State University estimates that a total of 16.1 million visitors came to Arizona during 1984 and spent almost four billion dollars. (3) Included in this annual total are winter visitors to the desert portions of Arizona. These �re largely retired couples fleeing the frost belt states and Canada during the hostile winter months. (5) Western Savings Foresight Eighty , 1980 edition indicates that the largest concentrations of winter visitors are found in Scottsdale and Mesa/Apache Junction. A recent survey estimates that the Metropolitan Phoenix Area received $381,000,000 in visitor spending during the 1985-1986 winter tourist season. (1)

Available evidence suggests that considerable seasonality occurs within the state of Arizona's tourist industry. (Table 1) However, very little information exists to show how these seasonal effects are distributed throughout the calendar year in particular de�tination areas, and among different categories of businesses, or how they may have fluctuated over time. This ·study examines the seasonality of tourism in Scottsdale, Arizona, for the years 1972 through 1984.

AGGREGATED SEASONALITY IN SCOTTSDALE

Figures on sales tax revenues are the principal data set employed in this study. Sales tax collection amounts for major Scottsdale business types are analyzed for the years 1972 through 1984. The business categories identified are: 1) Automotive, 2) Construction, 3) Food Stores, 4) Hotels and Motels, 5) Department Stores, 6) Retail Stores, 7) Rental Properties, 8) Utilities, and 9) Other (city-defined taxable activities such as newspapers and advertisements).

Methodologically, the initial step is to determine which months of 26 the year constitute the "tourist season". In the interest of simplicity, the calendar year can be divided into "the tourist season", the six months with highest tourism impact and "the nonseason", the six months with lowest impact. (Figure 1)

The data in Figure 1 indicate that the six months with the highest total sales tax collections are March, April, June, October, November, and December. However, individual business subgroups exhibit somewhat different monthly patterns. This study hypothesizes that some business types will experience higher sales activity during the 'tourist season, while others will be largely unaffected.

A study by Dave Larkin in Scottsdale Scene observes that winter visitors begin arriving in Scottsdale as early as September and as late as March. (4) Another study based on a telephone survey for Apache Junction, a small town a few miles southeast of Scottsdale, indicates October to· May as the tourist season for many. (8) Others may designate the transitional months of October and May as the "shoulder season"--the period between the tourist season and nonseason. Nonetheless, some winter visitors arrive in Scottsdale as early as October and leave the city as late as May. the so-called peak season for out-of-state visitors is generally considered to be the months of January, February and March. ( 3)

. Figure 2 shows when individual business categories experience their busiest months (generate their greatest tax revenues). Clearly, the six months of highest tax collection vary among the categories. However, the six months with highest sales tax collection for Hotels, Restaurants and Retail Stores, the most tourist-sensitive of these business classes, occur rather consistently from November through April. Accordingly, in this study the six month period of November through April is considered to be "The Tourist Season". These are the months when any changed impact from tourists will be most in evidence.

VARIABLE SEASONALITY AMONG INDIVIDUAL BUSINESS CATEGORIES

Table 2 illustrates that particular categories of businesses are affected differently by seasonality. Those affected most during 1984 were Hotels and Motels, Restaurants, and Food Stores, Department Stores and Retail Stores. Businesses affected less were rental, and other taxable activities. Businesses least affected were Automobiles and Construction. Utilities, also, were affected very much by variations in the number of consumers. But this is not apparent in Table 2 because the greatly reduced visitor population in the summer months is counterbalanced by higher summer electricity rates with commensurately higher sales tax revenues. In addition, the monthly revenues presented in Table 2 allow for a comparative assessment of the individual business categories vis 'a vis their aggregate and seasonal contribution of tax revenues into City of Scottsdale coffers. In 1984 the monthly sales tax collection of those businesses - affected by winter visitors range from $761,912 (Restaurants) to $1,751,315 (Retail ·Stores) during the tourist season, and from 27 $594,806 (Others) to $1,215,330 (Retail Stores) during the nonseason. The differences between the tourist season and the nonseason by type of business range from $35,179 (Other) to $671,169 (Hotels and Motels). Other businesses with significant differences are Retail Stores ($535,985), Department Stores ($311,137), Restaurants ($157,447), Food Stores ($99,394), and Rental ($89,801).

These findings establish 1) that tourism contributes significant amounts of money into the Scottsdale economy and 2) that some businesses are far more sensitive to the influx of winter visitors than others. It is important to note, however, that fluctuations are not affected by winter visitors alone. Other factors include Christmas sales (Department Stores), lower summer rates (Utilities), or summer discounts (Hotels and Motels) and the different sales tax rate between business classes. Although these factors are recognized as important, it is presumed that their various influences do not dominate the overall pattern of sales tax collection.

Finally, Table 2 illustrates the level of sensitivity of each business class to seasonal winter visitors. Not surprisingly, the 33.61% difference of sales taxes collected between the tourist season and nonseason from Hotels and Motels renders this category the most tourist-sensitive of the ten types. The sales tax from Hotels and Motels for the months of October and May also are high--suggesting that these two months are transition months be�ween the tourist and nontourist seasons. Next in importance after Hotels and Motels are Retail Stores, Department Stores and Rest�urants. Mediumly sensitive business classes are Rental and Food Stores.

The business categories with greater seasonal fluctuations in sales taxes during 1984 are shown graphically in Figure 3. The Scottsdale hotel industry reaches its peak in February and March, with a low point in August. Retail Stores peak in December and April with lowest sales occuring in August. Department Stores have a peak in December and a valley in August. Restaurants and Food Stores reach their peak sales in April, while Rental Property experiences up and down sales throughout the year.

Businesses lacking a seasonal pattern that can be related to the winter influx of visitors are resented in Figure 4. The Other category is relatively insensitive while Automobile and Construction are least sensitive to tQe spending of winter visitors. Figure 4 shows these industries experiencing up and down sales with a slight peak in June (a nonseason month) for Automotive, Construction, and Other taxable activities, while the· peak fo Utilities occurs in August (also a nonseason month). This pattern does not indicate that Utilities are insensitive to winter visitors, however, but merely that differences between higher summer electricity rates and lower winter charges offset the loss of seasonal reduction in visitors.

In sum, six types of businesses demonstrate at least some evidence of seasonality during the calendar year. These are Retail Stores, Hotels, Restaurants, Rentals, Food Stores and Department Stores. However, no appreciable correspondence with visitor arrivals·is the case for Constrriction, Automotive, Utilities or Others. 28 VARIABLE SEASONALITY SINCE 1972

How has the seasonality of visitor expenditures changed over the years? The share of individual business classes for three time periods is shown in Table 3. These figures show that the combined amount of winter visitor sales taxes increased from $354,138 in 1972-1975, to $906,955 in 1976-1979, to $41,780,150 in 1980-1984. Perhaps more importantly, the percentage of total revenue derived from winter visitors increased from 8.43% in 1972-1975, to 12.82% in 1976-1979, and 14.03% in 1980-1984.

Finally, since hotels are the type of business most sensitive to visitor seasonality, historical patterns of hotel-based tax revenues were examined. Monthly mean values of hotel sales tax revenues for the periods of 1972-1975, 1976-1979, and 1980-1984 are graphed in Figure 5. The graph indicates that the hotel business is more seasonal at present than in the early 1970s. Hence, whatever the economic impacts of seasonality, they have been increasing and appear likely to become even greater.

SUMMARY AND CONCLUSIONS

The purpose of this short paper is to examine the seasonality of tourism in Scottsdale, Arizona. A more specific goal is to explore how particular types of businesses respond to seasonality. A review of Scottsdale sales tax revenue data reveals that, indeed, 1) revenues do increase considerably during the tourist season and 2) many businesses generate far greater revenues during those winter months of the year when visitors to Scottsdale are present in greatest number. Furthermore, examination of past data suggests that the tourist industry has become increasingly seasonal over the years. With evidence showing that tourism, as measured by sales tax collections, is not uniformly distributed throughout the year, nor among individual categories of businessess, the hypothesis that selected businesses will experience higher sales activity during the tourist season can be accepted.

The sales tax data base utilized in this study allows for more than mere confirmation of the time-honored observation that the tourist industry is seasonal (if dissimilarly for individual businesses). Further analyses of such accurate information can lead to an improved understanding of tourist seasons and cycles; thereby permitting fine-tuning of the supportive infrastructure required to faciltate this ebb and flow of visitors. Sales tax data are widely available in U.S. communities such as Scottsdale, and warrant a careful examination by those seeking to understand tourism seasonality and it multiple effects upon local communities.

*The authors wish to extend their special gratitude to Mr. Michael Stroup, Revenue Director, City of Scottsdale, Arizona, for making 29 the tax revenue data available.

REFERENCES

1. J. Fifield, S. Happel, and T. Hogan, "Valley's Winter Residents Spend $381 Million," Arizona Business, Vol. 33(6), pp. 1-4, June, 1986.

2. Foresight Eighties, Western Savings, Phoenix, Arizona, 1980. 3. v. Heller, The Arizona Travel and Tourism Industry: 1984, Travel and Tourism Studies, College of Public Programs, Arizona State University, Tempe, Arizona, 1985.

4. D. Larkin, "The Scottsdale Study," Scottsdale Scene, Special Edition, 1985. 5. R. C. Mings, "Recreational Nomads in the Southwestern Sunbelt," Journal of Cultural Geography, Vol. 4(2), pp. 86-99, 1984.

6. "Part-time Residents Survey," Scottsdale Community Planning Special Report, 1985.

7. H. Robinson, A Geography of Tourism, MacDonald and Evans, London, England, 1976� 8. J. A. Soesilo, "Analysis of Temporary Settlement Pattern in Apache Junction, Arizona," Unpublished Report, Department of Geography, Arizona State University, Tempe, Arizona, 1983.

30 TABLE 1

ARIZONA TOURIST EXPENDITURES BY QUARTER 1984

Air Line Travelers

QUARTER

Category I II III IV Total

Lodging $142,342 $114,652 $ 99,780 $112,606 $469,380 Food & Beverages 118,772 92,256 79,670 91,661 382,359 Transportation 32,701 27,947 35,470 39,720 135,838 Entertainment 31,387 24,042 21,828 18,332 95,589 Retail Sales 67,818 51,086 46,384 61,108 226,396 Other 15,744 15,025 10,914 6,111 47,794 Total $408,764 $325,008 $294,046 $329,538 $1,357,356

Highway Travelers QUARTER

Category I I I III IV v

Lodging $131,832 $150,188 $161,314 $112,920 $556,254 Food & Beverage 143,068 166,268 177,867 157,246 644,449 Transportation 154,538 210,944 221,762 185,445 772,689 Entertainment 37,198 51,055 53,608 40,480 182,341 Retail Sales 85,197 96,111 100,335 70,411 352,054 Other 26,682 19,211 13,519 29,529 88,941

Total $578,515 $693,"777 $728,405 $596,031 $2,596,728 Airline/Highway Combined $987,279 $1,018,785 $1,022,451 $925,569 $3,954,084

Source: Vic Heller, The Arizona Travel and Tourism Industry: 1984 Travel and _Tourism Studies, · _College of Public Programs, Arizona State University, Tempe,· AZ, 1985.

31 Table 2

Monthly Sples Tax in 1984 by Business Classification

Month Food Restaur Departm Retail Hotel Rental Others Automot Constru Utilit

November 135380 112731 164342 240404 161130 142673 108352 239235 292961 66610 December 130790 117524 278131 434723 118734 127771 136587 204923 334325 66294 January 162067 117872 141946 235409 214662 111888 103819 237515 232174 41466 February 123188 117018 97381 272944 303907 112242 69858 267050 224420 68522 March 1302'25 147087 201419 274934 317274 146698 115407 312000 342029 67647 April 187922 149680 181681 292901 218289 125886 95962 312087 356777 71477

Total A 869572 761912 1065900 1751315 1333996 767158 629985 15 72810 1782686 382016 w May 141204 105216 101035 212041 184345 111423 77179 308917 242864 64263 tv June 113174 107836 165721 227610 99117 123836 145034 344132 399084 87631 July 118308 95534 105624 186132 81922 115893 120954 192667 299438 79050 August 114137 85306 63736 156559 62933 97207 57746 259425 271842 92380 September 135585 110607 170108 215821 96478 128419 93915 211862 345043 88945 October 147770 99966 148539 217167 138032 100579 99978 265434 310023 57350

Total B 770178 604465 754763 1215330 662827 677357 594806 1582437 1868294 469619

C = A + B 1639750 1366377 1820663 2966645 1996823 1444515 1224791 3155247 3650980 851635 D = A - B 99394 157447 311137 535985 671169 89801 35179 -9627 -85608 -87603

E = D c 6.06 11.52 17-.09 18.07 33.61 6.22 2.88 -0.31 -2.34 -10. 29 (%)

Source: Management Services Department, Scottsdale� Arizona TABLE 3

BENEFIT OF WINTER VISITORS FROM 1972 TO 1984

Share of Winter Visitors in Sales Tax Business Class 1972-1975 1976-1979 1980-1984

1. Hotel $70,947 $385,161 $997,357 2. Retail Store 90,255 202,297 308,925 3. Department Store 71,410 129,007 160,058 4. Restaurant 41,0·0 9 67,544 91,405 s. Foqd Store 35,490 52,641 125,112 6. Rental 19,438 28,207 70,315 7. Others 25,589 42,098 26,978

Sub Total (in $) 354,138 906,955 1,780,150 (in %) 8.43 12.82 14.03

Total Tax $4,202,630 $7,074,139 $12,686,876

1) mean annual amount 2) since 1978 includes bed-tax

Source: Management Services Department, Scottsdale, Arizona.

33 FIGURE 1 MONTHS1 WITH LARGEST TOTAL SALES TAX COLLECTIONS, · 1972.1114, SCOTTSDALE, ARIZONA.

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 1972 1973 1974 1975 1976 19n 1978 1979 1980 1981 1982 1983 1984 TOTAL 4 6 11 8 4 7 5 7 13 11

1 The six months with the largest amounts.

Source: Management Services Department, Scott9dale, Arizona.

34 FIGURE2 MONTHS WITH LARGEST SALES TAX COLLECTIONS, 1 BY BUSINESS CATEGORY 1972-1984, SCOTTSDALE, ARIZONA

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC HOTELS/MOTELS.______RESTAURANTS ·-·-·-·-··· RETAIL STORES ·-·-·-·-· DEPARTMENT STORES FOOD STORES RENTALS OTHER TAXABLE ACTIVITIES AUTOMOTIVE UTILITIES CONSTRUCTION TOTAL TAX COLLECTION

1 For each buai,,...category, twelve monthly means were calculatedfor theyears 1972 through 1984. ZSince 1978, includes bed tax.

Source: Management Services Department, Scottsdllle, Arizona.

35 FIGURE 3 BUSINESS· CATEGORIES DEMONSTRATING SEASONALITY SALES TAX COLLECTIONS, 1984.

500

Retail Stores

Hotels

Restaurants 400 Rental � Cf) Food Stores ·-·-···-· Department <..J ..J Stores 0 300 0 0 Cf) 0z < 200 0

100

Q'--��--' N D J F M A M J J A S O MONTH

36 FIGURE4 BUSINESS CATEGORIES LACKING SEASONALITY SALES TAX COLLECTIONS, 1984.

-- Construction -- Automotive 400 -- Utilities ---- Others � . ccC/'J �<( � 300 0 0 u.. 0 C/'J 0 z 200 <( C/'J :::, 0 :I: � 100

0 ------� N D J F M A M J J A S O MONTH

37 FIGURES CHANGING SALES TAX COLLECTIONS FOR SCOTTSDALE HOTELS.

� -- 1980-1984 en a: -- 1972-1975

-- 1976-1979 j 00 O 2 Q LL 0 en 0 � 100 en :) 0 ::r: r- o L.:======-��-======-======:_J N D J F M A M J J A S O

MONTH